EXHIBIT 1.1 - UNDERWRITING AGREEMENT
EXECUTION COPY
$600,000,000
CARMAX AUTO OWNER TRUST 2003-2
$129,000,000 1.13% Class A-1 Asset Backed Notes
$147,000,000 1.68% Class A-2 Asset Backed Notes
$129,000,000 2.36% Class A-3 Asset Backed Notes
$129,000,000 3.07% Class A-4 Asset Backed Notes
$18,000,000 2.50% Class B Asset Backed Notes
$24,000,000 2.75% Class C Asset Backed Notes
$24,000,000 3.78% Class D Asset Backed Notes
CARMAX AUTO FUNDING LLC
Depositor
CARMAX AUTO SUPERSTORES, INC.
Servicer
UNDERWRITING AGREEMENT
October 22, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Securities LLC
as Representative of the
several Underwriters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
CarMax Auto Funding LLC, a Delaware limited liability company (the
"Depositor"), hereby confirms its agreement with Banc of America Securities LLC
("Bank of America") and each of the other underwriters named in Schedule A
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10), for whom Bank of
America is acting as representative (the "Representative"), with respect to the
sale by the Depositor and the purchase by the Underwriters, acting severally and
not jointly, of the respective principal amounts set forth in Schedule A of
$129,000,000 aggregate principal amount of 1.13% Class A-1 Asset Backed Notes
(the "Class A-1 Notes"), $147,000,000 aggregate principal amount of 1.68% Class
A-2 Asset Backed Notes (the "Class A-2 Notes"), $129,000,000 aggregate principal
amount of 2.36% Class A-3 Asset Backed Notes (the "Class A-3 Notes"),
$129,000,000 aggregate principal amount of 3.07% Class A-4 Asset Backed Notes
(the "Class A-4 Notes" and together with the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes, the "Class A Notes"), $18,000,000 aggregate
principal amount of 2.50% Class B Asset Backed Notes (the "Class B Notes"),
$24,000,000 aggregate principal amount of 2.75% Class C Asset Backed Notes (the
"Class C Notes" and $24,000,000 aggregate principal amount of 3.78% Class D
Asset Backed Notes (the "Class D Notes" and, together with the Class A Notes,
the Class B Notes and the Class C Notes, the "Notes") of the CarMax Auto Owner
Trust 2003-2 (the "Trust") under the terms and conditions contained herein.
Simultaneously with the issuance and sale of the Notes as contemplated
herein, the Trust will issue the CarMax Auto Owner Trust 2003-2 Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The Notes will be issued pursuant to an indenture, dated as of
October 1, 2003 (the "Indenture"), between the Trust and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee (the "Indenture Trustee"). The Trust
will be created and the Certificates will be issued pursuant to an amended and
restated trust agreement, dated as of October 1, 2003 (the "Trust Agreement"),
among the Depositor, The Bank of New York ("BONY"), as trustee (the "Owner
Trustee"), and The Bank of New York (Delaware) ("BONY Delaware"), as Delaware
trustee (the Delaware Trustee"). Each Note will represent an obligation of the
Trust, each Certificate will represent an undivided beneficial interest in the
Trust and the Certificates will be subordinated to the Notes to the extent
described in the Indenture and the Trust Agreement.
The assets of the Trust will include, among other things, (i) a pool of
motor vehicle retail installment sale contracts (the "Receivables") secured by
the new and used motor vehicles financed thereby (the "Financed Vehicles"), (ii)
certain monies payable under the Receivables after October 20, 2003, (iii)
security interests in the Financed Vehicles, (iv) amounts on deposit in certain
accounts, (v) certain rights under a receivables purchase agreement, dated as of
October 1, 2003 (the "Receivables Purchase Agreement"), between CarMax Auto
Superstores, Inc. ("CarMax") and the Depositor, pursuant to which CarMax will
sell the Receivables to the Depositor, (vi) certain rights under a sale and
servicing agreement, dated as of October 1, 2003 (the "Sale and Servicing
Agreement"), among the Trust, the Depositor and CarMax, as servicer (the
"Servicer"), pursuant to which the Receivables and other property of the Trust
will be sold to the Trust and the Receivables will be serviced by the Servicer
and (vii) all proceeds of the foregoing. Pursuant to the Indenture, the Trust
property will be held by the Indenture Trustee on behalf of the holders of the
Notes. Pursuant to an administration agreement, dated as of October 1, 2003 (the
"Administration Agreement"), among CarMax, as administrator (in such capacity,
the "Administrator"), the Trust and the Indenture Trustee, the Administrator
will perform certain administrative obligations of the Trust under the
Indenture. Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Indenture or the Sale and Servicing
Agreement, as the case may be.
The Indenture, the Trust Agreement, the Administration Agreement, the Sale
and Servicing Agreement and the Receivables Purchase Agreement are referred to
herein collectively as the "Basic Documents".
The Depositor has prepared and filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-3 (File No.
333-107925), including a preliminary base prospectus and a form of preliminary
prospectus supplement relating to the offering of asset backed notes and asset
backed certificates, issued in series from time to time in accordance with Rule
415 under the Securities Act of 1933, as amended (the "Securities Act"). Such
registration statement has been declared effective by the Commission. If any
post-effective amendment has been filed with respect thereto, prior to the
execution and delivery of this Agreement, the most recent such amendment has
been declared effective by the Commission. The Depositor will file a final base
prospectus and a final prospectus supplement relating to the Securities in
accordance with Rules 415 and 424(b)(2) or (5) under the Securities Act. The
Depositor has included in such registration statement, as amended at the
Effective Date (as
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hereinafter defined), all information required by the Securities Act and the
rules and regulations of the Commission under the Securities Act (the
"Securities Act Regulations") to be included in the prospectus with respect to
the offering of the Notes. As filed, the final prospectus and the final
prospectus supplement shall include all required information with respect to the
offering of the Notes and shall be in all substantive respects in the form
furnished to the Representative prior to the Execution Time (as hereinafter
defined) or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond those
contained in the latest preliminary base prospectus and preliminary prospectus
supplement, if any, that have been previously been furnished to the
Representative) as the Depositor has advised the Representative, prior to the
Execution Time, will be included or made therein.
As used herein, "Execution Time" means the date and time this Agreement is
executed and delivered to the parties hereto and "Effective Date" means the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission. Such
registration statement, as amended as of the Effective Date, including the
exhibits thereto and any material incorporated by reference therein pursuant to
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is referred to as the "Registration Statement". "Base
Prospectus" means the base prospectus included in the Registration Statement, as
amended at the time of the filing of the Prospectus. "Preliminary Prospectus"
means any preliminary prospectus supplement to the Base Prospectus and the Base
Prospectus which describes the offering of the Notes and is used prior to the
filing of the Prospectus. "Prospectus" means the supplement to the Base
Prospectus that is first filed after the Execution Time pursuant to Rule 424(b)
of the Securities Act Regulations, together with the Base Prospectus, as amended
at the time of such filing; provided, however, that a supplement to the Base
Prospectus shall be deemed to have supplemented the Base Prospectus only with
respect to the offering of the series of securities to which it relates.
"Prospectus Supplement" means the supplement to the Base Prospectus included in
the Prospectus.
To the extent that the Depositor has prepared (i) Collateral Term Sheets
(as defined in Section 6) that the Underwriters, the Depositor or CarMax have
provided to a prospective investor, the Depositor shall file with the Commission
such Collateral Term Sheets as an exhibit to a report on Form 8-K within two
business days of its receipt thereof or (ii) Structural Term Sheets or
Computational Materials (each as defined in Section 6), the Depositor shall file
with the Commission a report on Form 8-K containing such Structural Term Sheets
or Computational Materials, as soon as reasonably practicable after the date of
this Agreement, but in any event, not later than the date on which the
Prospectus is made available to the Representative in final form.
All references in this Agreement to financial statements and schedules and
other information which is "contained", "included" or "stated" in the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are or are deemed to be incorporated by reference in the Registration Statement,
any Preliminary Prospectus or the Prospectus, as the case may be. All references
in this Agreement to the terms "amend", "amendments" or "supplements" with
respect to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall
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be deemed to mean and include the filing of any documents under the Exchange Act
after the Effective Date of the Registration Statement or the issue date of the
Base Prospectus, any Preliminary Prospectus or the Prospectus, as the case may
be, which are or are deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Depositor. The Depositor
represents and warrants to the Underwriters as of the date hereof and as of the
Closing Time referred to in Section 2(b) and agrees with the Underwriters as
follows:
(i) Compliance with Registration Requirements. The Depositor meets
the requirements for use of Form S-3 under the Securities Act. If the
Registration Statement contains the undertaking specified by Regulation S-K
Item 512(a), the Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x). The Registration Statement has
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Securities Act and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Depositor, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with. The Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
At the respective times that the Registration Statement and any
post-effective amendments thereto became effective and at the Closing Time,
the Registration Statement and any amendments thereto complied and will
comply in all material respects with the requirements of the Securities
Act, the Securities Act Regulations, the Trust Indenture Act and the rules
and regulations of the Commission under the Trust Indenture Act (the "Trust
Indenture Act Regulations") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendment or supplement thereto,
at the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time, included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Depositor in writing by any Underwriter through the
Representative expressly for use in the Registration Statement or the
Prospectus.
Any Preliminary Prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to
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Rule 424 of the Securities Act Regulations, complied when so filed in all
material respects with the Securities Act Regulations and any Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with the offering of the Notes will, at the time of such
delivery, be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Regulations") and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the date of the Prospectus and
at the Closing Time, did not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise set forth therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Depositor, whether
or not arising in the ordinary course of business, or in the ability of the
Depositor to perform its obligations under this Agreement and each Basic
Document to which it is a party (a "Material Adverse Effect") and (B) there
have been no transactions entered into by the Depositor, other than those
in the ordinary course of business, which are material with respect to it.
(iv) Due Organization of the Depositor. The Depositor has been duly
formed and is validly existing as a limited liability company under the
laws of the State of Delaware, and all filings required at the date hereof
under the Delaware Limited Liability Company Act (6 Del. C. Section18-101,
et seq.) (the "LLC Act") with respect to the due formation and valid
existence of the Depositor as a limited liability company have been made;
the Depositor has all requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus and to enter into and to perform
its obligations under each Basic Document to which it is a party
(collectively, the "Depositor Agreements"), this Agreement and the
Securities; and the Depositor is duly qualified or registered as a foreign
limited liability company to transact business and is in good standing in
each jurisdiction in which such qualification or registration is required,
whether by reason of the ownership of property or the conduct of business,
except where the failure to so qualify or register or to be in good
standing would not result in a Material Adverse Effect.
(v) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Depositor.
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(vi) Authorization of Basic Documents. As of the Closing Time, each
Depositor Agreement has been duly authorized, executed and delivered by the
Depositor, and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, will constitute a valid and binding
agreement of the Depositor, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(vii) Issuance of the Notes. The Notes have been duly authorized and,
at the Closing Time, will have been duly executed and, when authenticated,
issued and delivered in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor as provided in
this Agreement, will constitute valid and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(viii) Issuance of the Certificates. The Certificates have been duly
authorized and, at the Closing Time, will have been duly executed and, when
authenticated, issued and delivered in the manner provided for in the Trust
Agreement, will be validly issued and outstanding and will be in the form
contemplated by, and entitled to the benefits of, the Trust Agreement.
(ix) Description of the Securities and Basic Documents. The
Securities and the Basic Documents conform in all material respects to the
descriptions thereof and the statements relating thereto contained in the
Registration Statement and the Prospectus.
(x) Absence of Defaults and Conflicts. The Depositor is not in
violation of its limited liability company agreement or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it may be bound, or to which any of its
properties or assets is subject (collectively, the "Depositor Agreements
and Instruments"), except for violations or defaults that would not result
in a Material Adverse Effect; and the execution, delivery and performance
by the Depositor of the Depositor Agreements, this Agreement and the
Securities, the consummation of the transactions contemplated herein or
therein, in the Registration Statement or in the Prospectus and compliance
by it with its obligations thereunder have been duly and validly authorized
by all necessary action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, a default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens") upon any of its property or assets
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pursuant to the Depositor Agreements and Instruments except for Liens
permitted by the Basic Documents and conflicts, breaches or defaults that,
individually or in the aggregate, will not result in a Material Adverse
Effect, nor will such action result in any violation of the provisions of
its limited liability company agreement or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Depositor or any of its assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence
of indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Depositor or CarMax, as the case may be.
(xi) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
the Depositor, threatened, against or affecting the Depositor which is
required to be disclosed in the Registration Statement and the Prospectus
(other than as stated therein or stated in a document incorporated by
reference therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect its properties or assets; the aggregate of
all pending legal or governmental proceedings to which the Depositor is a
party or of which any of its properties or assets is the subject which are
not described in the Registration Statement and the Prospectus, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(xii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein which have not been so
described and filed as required.
(xiii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court, governmental authority or agency or
any other person is necessary in connection with (A) the issuance of the
Securities or the offering and sale of the Notes, (B) the execution,
delivery and performance by the Depositor of the Depositor Agreements or
this Agreement or (C) the consummation by the Depositor of the transactions
contemplated hereby or thereby, except such as have been obtained and are
in full force and effect as of the Closing Time.
(xiv) Possession of Licenses and Permits. The Depositor possesses or,
as of the Closing Time, has applied, for such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it;
the Depositor is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; except for
Governmental Licenses that have been applied for as of the Closing Time,
all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or
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the failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect or would render a material portion
of the Receivables unenforceable; and the Depositor has not received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect or would render a material portion of the
Receivables unenforceable.
(xv) Title to Receivables; Payment of Fees. As of the Closing Time,
the Depositor will have good and marketable title to the Receivables listed
in Schedule 1 to the Sale and Servicing Agreement, free and clear of any
Lien; and the Depositor's assignment and delivery of the Receivables to the
Trust will vest in the Trust the good and marketable title purported to be
conveyed thereby to, and the Trust will be the sole owner of, each
Receivable free and clear of Liens other than the Lien in favor of the
Indenture Trustee under the Indenture; all taxes, fees and other
governmental charges arising in connection with the transactions
contemplated by this Agreement and the Basic Documents and with the
execution and delivery of the Receivables, including any amendments thereto
and assignments and/or endorsements thereof, have been paid by the
Depositor.
(xvi) Investment Company Act. Neither the Trust nor the Depositor is
required to be registered as an "investment company" under the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(xvii) Incorporation of Representations and Warranties. The
representations and warranties of the Depositor in each Depositor Agreement
are true and correct in all material respects and are hereby incorporated
by reference herein and restated for the benefit of the Underwriters with
the same effect as if set forth in full herein.
(b) CarMax represents and warrants to the Underwriters as of the date
hereof and as of the Closing Time that the representations and warranties of the
Depositor set forth in Section 1(a) are true and correct as of the time made and
further represents and warrants to the Underwriters that:
(i) Due Organization of CarMax. CarMax has been duly incorporated
and is validly existing in good standing under the laws of the Commonwealth
of Virginia and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary, except such jurisdictions, if any, in which the
failure to be so qualified will not have a Material Adverse Effect on
either the business or properties of CarMax; CarMax has the corporate power
and authority to own its properties and conduct its business as described
in the Prospectus and to enter into and perform its obligations under each
Basic Document to which it is a party (collectively, the "CarMax
Agreements") and this Agreement; CarMax holds all material licenses,
certificates and permits from all governmental authorities necessary for
the conduct of its business as described in the Prospectus.
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(ii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by CarMax.
(iii) Authorization of Basic Documents. As of the Closing Time, each
CarMax Agreement has been duly authorized, executed and delivered by
CarMax, and, assuming the due authorization, execution and delivery thereof
by the other parties thereto, will constitute a valid and binding agreement
of CarMax, enforceable against it in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(iv) Absence of Defaults and Conflicts. CarMax is not in violation
of its articles of incorporation or bylaws or in default in the performance
or observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which it is a
party or by which it may be bound, or to which any of its properties or
assets is subject (collectively, the "CarMax Agreements and Instruments"),
except for violations or defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance by CarMax of
the CarMax Agreements and this Agreement, the consummation of the
transactions contemplated herein or therein, in the Registration Statement
or in the Prospectus and compliance by it with its obligations thereunder
have been duly and validly authorized by all necessary action and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, a default or
Repayment Event under, or result in the creation or imposition of any Lien
upon any of its property or assets pursuant to the CarMax Agreements and
Instruments except for Liens permitted by the Basic Documents and
conflicts, breaches or defaults that, individually or in the aggregate,
will not result in a Material Adverse Effect, nor will such action result
in any violation of the provisions of its articles of incorporation or
bylaws or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over CarMax or any of its assets,
properties or operations.
(v) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
CarMax, threatened, against or affecting CarMax which is or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect its
properties or assets; the aggregate of all pending legal or governmental
proceedings to which CarMax is a party or of which any of its properties or
assets is the subject which are not described in the Prospectus, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(vi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court,
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governmental authority or agency or any other person is necessary in
connection with (A) the issuance of the Securities or the offering and sale
of the Notes, (B) the execution, delivery and performance by CarMax of the
CarMax Agreements or this Agreement or (C) the consummation by CarMax of
the transactions contemplated hereby or thereby, except such as have been
obtained and are in full force and effect as of the Closing Time.
(vii) Possession of Licenses and Permits. CarMax possesses or, as of
the Closing Time, has applied, for such Governmental Licenses issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it; CarMax is in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; except for Governmental Licenses
that have been applied for as of the Closing Time, all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not have a Material Adverse Effect or
would render a material portion of the Receivables unenforceable; and
CarMax has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect or would render a
material portion of the Receivables unenforceable.
(viii) Title to Receivables; Payment of Fees. As of the Closing Time,
CarMax will have good and marketable title to the Receivables listed in
Schedule 1 to the Receivables Purchase Agreement, free and clear of any
Lien; and CarMax's sale and delivery of the Receivables to the Depositor
will vest in the Depositor the good and marketable title purported to be
conveyed thereby.
(ix) No Material Adverse Change. Since the date as of which
information is given in the Prospectus, except as otherwise set forth
therein, (A) there has been no Material Adverse Effect with respect to
CarMax and (B) there have been no transactions entered into by CarMax,
other than those in the ordinary course of business, which are material
with respect to it.
(x) Incorporation of Representations and Warranties. The
representations and warranties of CarMax in each Basic Document to which it
is a party are true and correct in all material respects and are hereby
incorporated by reference herein and restated for the benefit of the
Underwriters with the same effect as if set forth in full herein.
(c) Officer's Certificates. Any certificate signed by any officer of
CarMax, the Depositor or any of their respective Affiliates and delivered at the
Closing Time to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by CarMax, the Depositor or such Affiliate,
as the case may be, to the Underwriters as to the matters covered thereby. When
used in this Agreement, the term "Affiliate" or "Affiliates" shall have the
meaning assigned by Rule 501(b) of the Securities Act Regulations.
10
Section 2. Sale and Delivery to the Underwriters; Closing.
(a) Purchase of Notes. On the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein set
forth, the Depositor agrees to sell to the Underwriters, and the Underwriters
severally agree to purchase from the Depositor, the aggregate principal amount
of Notes set forth opposite each Underwriter's name on Schedule A at a purchase
price equal to, in the case of (i) the Class A-1 Notes, 100.0% of the principal
amount thereof, (ii) the Class A-2 Notes, 99.99991% of the principal amount
thereof, (iii) the Class A-3 Notes, 99.98149% of the principal amount thereof,
(iv) the Class A-4 Notes, 99.99015% of the principal amount thereof, (v) the
Class B Notes, 99.99514% of the principal amount thereof, (vi) the Class C
Notes, 99.99974% of the principal amount thereof and (vi) the Class D Notes,
99.99010% of the principal amount thereof..
(b) Payment. Payment of the purchase price, and delivery of certificates,
for the Notes shall be made at the offices of McGuireWoods llp, One ▇▇▇▇▇
Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other
place as shall be agreed upon by the Representative and the Depositor, at 10:00
A.M. (New York time) on October 30, 2003, or such other time not later than five
business days after such date as shall be agreed upon by the Representative and
the Depositor (such date and time of payment and delivery being called the
"Closing Time"). Pursuant to Rule 15c6-1(d) of the Exchange Act Regulations, the
parties hereto have agreed that the Closing Time will be not less than five
business days following the date hereof.
Each class of Notes will initially be represented by one or more
certificates registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Notes will be
represented by book entries on the records of DTC and participating members
thereof. Certificates for the Securities shall be made available for examination
by the Representative in Richmond, Virginia not later than 10:00 A.M. (New York
time) on the business day prior to the Closing Time.
Delivery of the Notes shall be made against payment of the purchase price
therefor by wire transfer of immediately available funds to a bank account
designated by the Depositor.
Section 3. Covenants of the Depositor. The Depositor covenants with each
Underwriter as follows:
(a) Compliance with Securities Act Regulations and Commission
Requests. The Depositor, subject to Section 3(b), will comply with the
requirements of Rules 424(b) and 430A of the Securities Act Regulations, if
and as applicable, and will notify the Representative immediately, and
confirm the notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
supplement or amendment to the Prospectus, (ii) the receipt of any comments
from the Commission, (iii) any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Notes
11
for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Depositor will
promptly effect the filings necessary pursuant to Rule 424 of the
Securities Act Regulations and will take such steps as it deems necessary
to ascertain promptly whether the Prospectus transmitted for filing under
Rule 424 of the Securities Act Regulations was received for filing by the
Commission and, in the event that it was not, it will promptly file the
Prospectus. The Depositor will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Depositor will give the Representative
notice of its intention to file or prepare any amendment to the
Registration Statement or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the Securities Act, the
Exchange Act or otherwise, will furnish the Representative with copies of
all such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the Representative or counsel for the Underwriters shall
object.
(c) Delivery of Registration Statements. The Depositor has furnished
or will deliver to the Representative and counsel for the Underwriters,
without charge, a signed copy of the Registration Statement as originally
filed and of the amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to
be incorporated by reference therein) and a signed copy of all consents and
certificates of experts, and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of the amendment thereto (without exhibits) for each
of the Underwriters. The Registration Statement and the amendment thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(d) Delivery of Offering Documents. The Depositor will deliver to
each Underwriter, without charge, as many copies of any Computational
Materials, any Structural Term Sheet, any Collateral Term Sheet and any
Preliminary Prospectus as such Underwriter may reasonably request, and the
Depositor hereby consents to the use of such copies for purposes permitted
by the Securities Act. The Depositor will furnish to each Underwriter,
without charge, during the period when the Prospectus is required to be
delivered under the Securities Act or the Exchange Act, such number of
copies of the Prospectus as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to any electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Depositor will
comply with the Securities Act and the Securities Act Regulations, the
Exchange Act and the Exchange Act Regulations and the Trust Indenture Act
Regulations so as to permit the completion of the distribution of the Notes
as contemplated in this Agreement, the Basic
12
Documents, the Registration Statement and the Prospectus. If at any time
when the Prospectus is required by the Securities Act or the Exchange Act
to be delivered in connection with sales of the Notes, any event shall
occur or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or counsel to the Depositor, to
amend the Registration Statement in order that the Registration Statement
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or to amend or supplement the Prospectus
in order that the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the Securities Act or the Securities Act
Regulations, the Depositor will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the
Depositor will furnish to the Underwriters, without charge, such number of
copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) State Securities Law Qualifications. The Depositor will use its
best efforts, in cooperation with the Underwriters, in arranging for the
qualification of the Notes for offering and sale and the determination of
their eligibility for investment, as the case may be, under the laws of
such jurisdictions as the Underwriters designate and will continue to
assist the Underwriters in maintaining such qualifications in effect for a
period of not less than one year from the date of the Prospectus; provided,
however, that the Depositor shall not be obligated to file any general
consent to service of process or to qualify as a foreign limited liability
company or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Notes have been so qualified, the Depositor will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the date of the Prospectus. The Depositor will also
supply the Underwriters with such information as is necessary for the
determination of the legality of the offering and sale of the Notes for
investment under the laws of such jurisdictions as the Underwriters may
reasonably request.
(g) Earnings Statement. The Depositor will timely file such reports
pursuant to the Exchange Act as are necessary in order to make generally
available to its security-holders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by,
the last paragraph of Section 11(a) of the Securities Act.
(h) Use of Proceeds. The Depositor shall cause the Trust to use the
net proceeds received by it from the sale of the Notes in the manner
specified in the Base Prospectus under "Use of Proceeds".
13
(i) Reports, Statements and Certificates. So long as any Notes are
outstanding, the Depositor shall deliver or cause to be delivered to the
Underwriters, as soon as copies become available, copies of (i) each
payment date certificate delivered to Securityholders pursuant to Section
4.9 of the Sale and Servicing Agreement, (ii) the annual statements of
compliance, annual independent certified public accountants' reports and
annual opinions of counsel furnished to the Indenture Trustee or the Owner
Trustee pursuant to the Basic Documents, as soon as such statements,
reports and opinions are furnished to the Indenture Trustee or the Owner
Trustee and (iii) such other information concerning CarMax, the Depositor,
the Trust or the Securities as the Underwriters may reasonably request from
time to time.
(j) Reporting Requirements. The Depositor, during the period when the
Prospectus is required to be delivered under the Securities Act or the
Exchange Act, will file all documents required to be filed with the
Commission pursuant to the Exchange Act within the time periods required by
the Exchange Act and the Exchange Act Regulations.
Section 4. Payment of Expenses.
(a) Expenses. The Depositor shall pay all of its own expenses incident to
the performance of its obligations under this Agreement, including without
limitation (i) the preparation, printing and filing of the Registration
Statement, any Computational Materials, any Structural Term Sheet, any
Collateral Term Sheet, any Preliminary Prospectus, the Prospectus and each
amendment or supplement thereto, (ii) the preparation, reproduction and delivery
to the Underwriters of this Agreement, any agreement among Underwriters, each
Basic Document and each other document as may be required in connection with the
issuance of the Securities or the offering, purchase, sale or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Notes to the Underwriters and the Certificates to the Depositor, (iv) the
fees and expenses of the counsel, accountants and other advisors of the
Depositor and any of its Affiliates in connection with the transactions
contemplated by this Agreement, (v) the qualification of the Notes under state
securities laws in accordance with the provisions of Section 3(f), including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection therewith, (vi) the printing and delivery to the
Underwriters of copies of any Computational Materials, any Structural Term
Sheet, any Collateral Term Sheet, any Preliminary Prospectus, the Prospectus and
any amendments or supplements thereto, (vii) the fees and expenses of the Owner
Trustee and the Indenture Trustee, including the reasonable fees and
disbursements of their respective counsel in connection with the transactions
contemplated by this Agreement and (viii) any fees payable to ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's") and Standard & Poor's, a Division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. ("Standard & Poor's" and, together with Moody's, the "Rating
Agencies") in connection with the rating of the Notes.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i),
the Depositor shall reimburse the Underwriters for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters are subject to the accuracy of the
representations and warranties of CarMax and the
14
Depositor contained in Section 1 or in certificates of any officer of CarMax,
the Depositor or any of their respective Affiliates delivered pursuant to the
provisions hereof, to the performance by CarMax and the Depositor of their
respective covenants and other obligations hereunder and to the following
additional conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act and at the Closing Time no proceedings for
that purpose shall have been instituted or be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel for the Underwriters. A prospectus containing information relating
to the description of the Securities, the specific method of distribution
and similar matters shall have been filed with the Commission in accordance
with Rule 424(b) of the Securities Act Regulations (or any required
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A of
the Securities Act Regulations).
(b) Accountants' Comfort Letter. At the Closing Time, the
Underwriters shall have received from KPMG LLP a letter or letters dated as
of the Closing Time, in form and substance as previously agreed upon by the
Representative and otherwise satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" with respect to certain financial, statistical and other
information contained in or incorporated by reference into the Prospectus.
(c) Officer's Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any Material Adverse Effect with
respect to either CarMax or the Depositor whether or not arising in the
ordinary course of business, and the Underwriters shall have received a
certificate, dated as of the Closing Time, of an authorized officer of (i)
the Depositor to the effect that (A) there has been no such Material
Adverse Effect, (B) the representations and warranties in Section 1(a) are
true and correct with the same force and effect as though expressly made at
and as of the Closing Time and (C) the Depositor has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time and (ii) CarMax to the effect
that (A) there has been no such Material Adverse Effect, (B) the
representations and warranties in Section 1(b) are true and correct with
the same force and effect as though expressly made at and as of the Closing
Time and (C) CarMax has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Time.
(d) Opinion of Bankruptcy Counsel for CarMax. At the Closing Time,
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of McGuireWoods llp, bankruptcy counsel for CarMax, in form
and substance satisfactory to counsel for the Underwriters, regarding (i)
the conveyance of the Receivables by CarMax to the Depositor being a "true
sale", (ii) the granting to the Depositor of a first
15
priority perfected security interest in the Receivables and (iii) to the
effect that should CarMax become the debtor in a case under the United
States bankruptcy code, the court would not order the substantive
consolidation of the assets and liabilities of the Depositor with those of
CarMax.
(e) Opinion of Tax Counsel for the Depositor. At the Closing Time,
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of McGuireWoods llp, federal and Virginia state income tax
counsel for the Depositor, in form and substance satisfactory to counsel
for the Underwriters, substantially to the effect that for federal and
Virginia state income tax purposes, the Notes will be considered debt and
the Trust will not be an association taxable as a corporation and that the
statements in the (i) Prospectus Supplement and (ii) Prospectus under the
headings "Summary - Tax Status", "Summary - ERISA Considerations",
"Material Federal Income Tax Consequences" and "ERISA Considerations", to
the extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such counsel and provide
a fair summary in all material respects.
(f) Opinion of Local Counsel for CarMax. At the Closing Time, the
Underwriters shall have received the favorable opinions, each dated as of
the Closing Time, of McGuireWoods llp, Florida, Georgia and Illinois
counsel for CarMax and Jenkens & ▇▇▇▇▇▇▇▇▇, P.C., Texas counsel for CarMax,
in form and substance satisfactory to counsel for the Underwriters,
substantially to the effect that (i) CarMax has acquired a first priority
perfected security interest in the Financed Vehicles, (ii) as to each
security interest in a Financed Vehicle created by a Receivable, no filing
or other action is necessary to perfect or continue the perfected status of
such security interest as against creditors of or transferees from the
obligor under such Receivable and (iii) upon consummation of the
transactions contemplated by the Basic Documents, the Trust has a perfected
security interest in the Financed Vehicles financed under Receivables
originated in the relevant jurisdiction.
(g) Opinion of Counsel for CarMax and the Depositor. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of McGuireWoods llp, counsel for CarMax and the
Depositor, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) CarMax is a corporation validly existing and in good
standing under the laws of the Commonwealth of Virginia and has the
corporate power and authority to own its properties and to conduct its
business as described in the Prospectus and to execute, deliver and
perform its obligations under this Agreement and the CarMax
Agreements.
(ii) The execution, delivery and performance by CarMax of this
Agreement and the CarMax Agreements have been duly and validly
authorized by all necessary corporate action on the part of CarMax.
(iii) This Agreement has been duly and validly executed and
delivered by each of CarMax and the Depositor.
16
(iv) Each CarMax Agreement has been duly and validly executed
and delivered by CarMax and constitutes a legal, valid and binding
agreement of CarMax, enforceable against CarMax in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, receivership, conservatorship and similar laws relating to
or affecting creditors' rights generally from time to time in effect
and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(v) Each Depositor Agreement has been duly and validly
executed and delivered by the Depositor and each of the Sale and
Servicing Agreement and the Receivables Purchase Agreement constitutes
a legal, valid and binding agreement of the Depositor, enforceable
against the Depositor in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium, receivership,
conservatorship and similar laws relating to or affecting creditors'
rights generally from time to time in effect and by equitable
principles of general applicability (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(vi) The authorization, execution, delivery and performance by
CarMax of this Agreement and the CarMax Agreements and the Depositor
of this Agreement and the Depositor Agreements and the issuance,
offering, sale or delivery of the Securities do not require the
consent, authorization, license, order, registration, qualification,
decree or approval of, or any filing with, any court or governmental
agency or body having jurisdiction over CarMax or the Depositor
(except such consents, authorizations, approvals or filings as have
been obtained or made and as are in full force and effect or those
that may be required under the state securities or blue sky laws of
the various states, and except for the filing of UCC-3 partial release
statements relating to the release of the existing liens on the
Receivables and the other property of the Trust of CarMax's secured
lenders and the filing of UCC-1 financing statements relating to the
conveyance of the Receivables and other property of the Trust by the
Depositor to the Trust and by the Trust to the Indenture Trustee,
which Uniform Commercial Code ("UCC") financing statement filings are
in the process of being made) and do not conflict with, violate,
result in a breach of or constitute a default under (A) any term or
provision of the amended and restated articles of incorporation or
bylaws of CarMax or any term or provision of the limited liability
company agreement of the Depositor, (B) in any material respect, any
statute, order known to such counsel, rule or regulation of any court
or governmental agency or body having jurisdiction over CarMax or the
Depositor or (C) in any material respect, any indenture or other
agreement or instrument known to such counsel to which CarMax or the
Depositor is a party or by which it or any of its respective
properties is bound.
(vii) To the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court,
administrative agency or
17
other tribunal (A) asserting the invalidity of this Agreement, any
CarMax Agreement, any Depositor Agreement or the Securities, (B)
seeking to prevent the issuance of the Securities or the consummation
by CarMax or the Depositor of the transactions contemplated by this
Agreement, the CarMax Agreements or the Depositor Agreements,
respectively, or (C) which, if adversely determined, would reasonably
be expected to materially and adversely affect the performance by
either CarMax or the Depositor of its obligations under, or the
validity or enforceability of, this Agreement, any CarMax Agreement or
any Depositor Agreement, as applicable.
(viii) Each of CarMax and the Depositor possesses such
Governmental Licenses issued by the appropriate federal, state, local
or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; each of CarMax and the Depositor is in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or
in the aggregate, have a Material Adverse Effect; all of such
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect or would render a material portion of
the Receivables unenforceable; and neither CarMax nor the Depositor
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect or would render a
material portion of the Receivables unenforceable.
(ix) Assuming that the Notes have been duly executed and
delivered by the Trust, authenticated by the Indenture Trustee in
accordance with the Indenture and delivered against payment of the
consideration specified in this Agreement, the Notes will be validly
issued and entitled to the benefits of the Indenture and will
constitute valid and binding obligations of the Trust, enforceable
against the Trust in accordance with their terms, except as the
enforcement thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other similar laws relating to or affecting
the enforcement of creditors' rights generally and to general
equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law), including concepts of commercial
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief.
(x) To the best knowledge of such counsel, no default by the
Depositor exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in the
Depositor Agreements and Instruments, except for defaults that would
not result in a Material Adverse Effect.
18
(xi) The Securities and the Basic Documents conform in all
material respects to the descriptions thereof and the statements
relating thereto contained in the Prospectus.
(xii) The execution, delivery and performance by CarMax and the
Depositor of this Agreement and the CarMax Agreements and the
Depositor Agreements, respectively, and the consummation of the
transactions contemplated herein and therein and compliance with their
respective obligations hereunder and thereunder do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event
under or result in the creation or imposition of any Lien upon any
property or assets of CarMax or the Depositor pursuant to any CarMax
Agreement and Instrument or any Depositor Agreement and Instrument, as
the case may be, except for Liens permitted by the Basic Documents and
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect, nor will
any such action result in any violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree known to
such counsel, of any government, government instrumentality or court
having jurisdiction over CarMax or the Depositor or any of their
respective properties, assets or operations.
(xiii) The information set forth in the (i) Prospectus
Supplement under the headings "Description of the Notes", "Description
of the Trust Agreement" and "Description of the Administration
Agreement", (ii) Prospectus Supplement and in the Base Prospectus
under the headings "Summary", "The Receivables", "Description of the
Receivables Transfer and Servicing Agreements" and "Description of the
Indenture" and (iii) Base Prospectus under the heading "Certain
Information Regarding the Securities", insofar as such statements
purport to summarize certain provisions of the Notes or the Basic
Documents, provide a fair summary of such provisions, and the
information set forth in the Base Prospectus under the heading
"Material Legal Issues Relating to the Receivables", to the extent
that they constitute matters of law or legal conclusions with respect
thereto, have been prepared or reviewed by such counsel and provide a
fair and accurate summary in all material respects.
(xiv) Neither the Trust nor the Depositor is required to be
registered as an "investment company" under the Investment Company
Act.
(xv) The Indenture has been duly qualified under the Trust
Indenture Act.
(xvi) The Indenture creates (i) a valid security interest in
favor of the Indenture Trustee in the Receivables, the security
interests in the Financed Vehicles securing the Receivables and the
proceeds of each of the foregoing and (ii) a first priority perfected
security interest in favor of the Indenture Trustee in all amounts
held in each of the Collection Account, the Note Payment Account and
the Reserve Account.
19
(xvii) The Registration Statement has become effective under the
Securities Act; to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(xviii) The Registration Statement and the Prospectus (in each
case other than the financial statements and supporting schedules
included therein or omitted therefrom and the Trustee's Statement of
Eligibility on Form T-1, as to which such counsel need not express any
opinion), as of their respective effective or issue dates, as the case
may be, complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act Regulations.
(xix) The Indenture constitutes a legal, valid and binding
agreement of the Trust, enforceable against the Trust in accordance
with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, receivership, conservatorship and similar laws
relating to or affecting creditors' rights generally from time to time
in effect and by equitable principles of general applicability
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Such counsel shall also state that such counsel has examined the
Registration Statement and the Prospectus and nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement (other than the financial statements and schedules
and other financial, numerical, statistical and quantitative information,
in each case contained or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which such counsel need make no
statement), at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other than the
financial statements and schedules and other financial, numerical,
statistical and quantitative information, in each case contained or
incorporated by reference therein or omitted therefrom and the Form T-1, as
to which such counsel need make no statement), at the date thereof and at
the Closing Time, included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(h) Opinion of Special Delaware Counsel for the Depositor. At the
Closing Time, the Underwriters shall have received the favorable opinion,
dated as of the Closing Time, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special
Delaware counsel for the Depositor, in form and substance satisfactory to
counsel for the Underwriters, substantially to the effect that:
(i) The Depositor is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to own its properties and to
conduct its business as described
20
in the Prospectus and to execute, deliver and perform its obligations
under this Agreement and the Depositor Agreements.
(ii) The Limited Liability Company Agreement of the Depositor,
dated as of August 6, 2003 (the "LLC Agreement"), by CarMax (the
"Member"), as the sole equity member of the Depositor, and the special
members named therein, constitutes a legal, valid and binding
agreement of the Member, and is enforceable against the Member in
accordance with its terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer and other
similar laws relating to or affecting the enforcement of creditor's
rights generally and to general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at
law).
(iii) Under the LLC Act and the LLC Agreement, the Depositor
has all necessary limited liability company power and authority to
execute and deliver, and to perform its obligations under this
Agreement and the Depositor Agreements.
(iv) Under the LLC Act and the LLC Agreement, the execution
and delivery by the Depositor of this Agreement and the Depositor
Agreements, and the performance by the Depositor of its obligations
hereunder and thereunder, have been duly authorized by all necessary
limited liability company action on the part of the Depositor.
(v) The execution and delivery by the Depositor of this
Agreement and the Depositor Agreements, and the performance by the
Depositor of its obligations hereunder and thereunder, do not violate
(A) any Delaware law, rule or regulation or (B) the LLC Act or the LLC
Agreement.
(vi) No authorization, consent, approval or order of any
Delaware court or any Delaware governmental or administrative body is
required solely in connection with the execution and delivery by the
Depositor of this Agreement or the Depositor Agreements or the
performance by the Depositor of its obligations hereunder or
thereunder.
(vii) The Depositor's assignment and delivery of the Trust
Property to the Trust and the filing of applicable UCC financing
statements with the Secretary of State of the State of Delaware (the
"Delaware Secretary of State") will vest in the Trust a perfected
security interest therein and the proceeds thereof; and such security
interest will be prior to any other security interest granted by the
Depositor that is perfected solely by filing of financing statements
under the UCC.
(i) Opinion of Special Delaware Counsel for the Trust. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time,
21
of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special Delaware counsel for the Trust,
in form and substance satisfactory to counsel for the Underwriters,
substantially to the effect that:
(i) The Trust has been duly formed and is validly existing as
a statutory trust pursuant to the laws of the State of Delaware, 12
Del. C. Sections 3801, et seq. (the "Statutory Trust Act"), and has
the power and authority under the Trust Agreement and the Act to
execute, deliver and perform its obligations under the Basic Documents
to which the Trust is a party, to issue the Certificates and the Notes
and to grant the Owner Trust Estate to the Indenture Trustee as
security for the Notes.
(ii) The Basic Documents to which the Trust is a party have
been duly authorized, executed and delivered by the Trust and the
Notes have been duly executed by the Trust.
(iii) The Trust Agreement constitutes a legal, valid and
binding agreement of the Depositor and the Owner Trustee, enforceable
against the Depositor and the Owner Trustee in accordance with its
terms, except as the enforcement thereof may be subject to or limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, fraudulent transfer and other similar laws relating to or
affecting the enforcement of creditor's rights generally and to
general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(iv) The Certificates have been duly authorized by the Trust
and, when executed by the Trust, authenticated by the Owner Trustee
and delivered to the Depositor in accordance with the Trust Agreement,
the Certificates will be validly issued and outstanding and entitled
to the benefits of the Trust Agreement.
(v) Neither the execution, delivery and performance by the
Trust of the Basic Documents to which the Trust is a party, the
Certificates or the Notes, nor the consummation by the Trust of any of
the transactions contemplated thereby, requires the consent or
approval of, the withholding of objection on the part of, the giving
of notice to, the filing, registration or qualification with, or the
taking of any other action in respect of, any governmental authority
or agency of the State of Delaware, other than the filing of the
Certificate of Trust with the Secretary of State.
(vi) Neither the execution, delivery and performance by the
Trust of the Basic Documents to which the Trust is a party, the
Certificates or the Notes, nor the consummation of the transactions
contemplated thereby, will conflict with or result in a breach of, or
constitute a default under the provisions of the Trust Agreement or
any law, rule or regulation of the State of Delaware applicable to the
Trust or, to our knowledge without independent investigation, any
judgment or order of the State of Delaware applicable to the Trust or
its properties or, to our knowledge without independent investigation,
any indenture, mortgage, contract
22
or other agreement or instrument to which the Trust is a party or by
which it is bound.
(vii) Under Section 3805(b) of the Statutory Trust Act, no
creditor of any Certificateholder shall have any right to obtain
possession of, or otherwise exercise legal or equitable remedies with
respect to, the Owner Trust Estate except in accordance with the terms
of the Trust Agreement.
(viii) Under Section 3805(c) of the Statutory Trust Act, except
to the extent otherwise provided in the Trust Agreement, a
Certificateholder has no interest in specific Trust property.
(ix) Under Section 3808(a) and (b) of the Statutory Trust Act,
the Trust may not be terminated or revoked by any Certificateholder,
and the dissolution, termination or bankruptcy of any
Certificateholder shall not result in the termination or dissolution
of the Trust, except to the extent otherwise provided in the Trust
Agreement.
(x) Under the Statutory Trust Act, the Trust is a separate
legal entity and, assuming that the Sale and Servicing Agreement
conveys good title to the Trust property to the Trust as a true sale
and not as a security arrangement, the Trust rather than the
Certificateholders will hold whatever title to the Trust property as
may be conveyed to it from time to time pursuant to the Sale and
Servicing Agreement, except to the extent that the Trust has taken
action to dispose of or otherwise transfer or encumber any part of the
Trust property.
(xi) To the extent that Article 9 of the UCC as in effect in
the State of Delaware is applicable (without regard to conflicts of
laws principles), and assuming that the security interest created by
the Indenture in the Collateral has been duly created and has
attached, upon the filing of the Financing Statement with the Delaware
Secretary of State, the Indenture Trustee will have a perfected
security interest in the Trust's rights in that portion of the
Collateral described in the Financing Statement that constitutes
"chattel paper," "general intangibles" or "accounts" (as such terms
are defined in the UCC) and the proceeds thereof; and such security
interest will be prior to any other security interest granted by the
Trust that is perfected solely by the filing of financing statements
under the UCC, subject to Section 9-312 of the UCC (with respect to
purchase money security interests) and Section 9-306 of the UCC (with
respect to temporarily perfected security interests in proceeds).
(j) Opinion of Counsel for the Indenture Trustee. At the Closing
Time, the Underwriters shall have received the favorable opinion, dated as
of the Closing Time, of in-house counsel for the Indenture Trustee, in form
and substance satisfactory to counsel for the Underwriters, substantially
to the effect that:
23
(i) The Indenture Trustee has been duly incorporated and is
validly existing as a national banking association under the laws of
the United States of America.
(ii) The Indenture Trustee, at the time of its execution and
delivery of the Indenture, had full power and authority to execute and
deliver the Indenture and the Administration Agreement (collectively,
the "Indenture Trustee Agreements") and has full power and authority
to perform its obligations thereunder.
(iii) Each of the Indenture Trustee Agreements has been duly
and validly authorized, executed and delivered by the Indenture
Trustee and, assuming due authorization, execution and delivery
thereof by the other parties thereto, constitutes the valid and
binding obligation of the Indenture Trustee enforceable against the
Indenture Trustee in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other laws
relating to or affecting creditors' rights or by general principles of
equity.
(iv) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
or affecting the Indenture Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
adversely decided, would materially and adversely affect the ability
of the Indenture Trustee to carry out the transactions contemplated in
the Indenture Trustee Agreements.
(v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof
was or is required for the execution, delivery or performance by the
Indenture Trustee of the Indenture Trustee Agreements.
(vi) Each of the Indenture Trustee Agreements has been duly
executed and delivered by the Indenture Trustee and constitutes a
legal, valid and binding obligation of the Indenture Trustee
enforceable against the Indenture Trustee in accordance with its
respective terms, except that certain of such obligations may be
enforceable solely against the Collateral and except that such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, liquidation or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles
of equity, including without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(vii) The Notes have been duly authenticated and delivered by
the Indenture Trustee in accordance with the terms of the Indenture.
(k) Opinion of Counsel for the Owner Trustee. At the Closing Time,
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of
24
McGuireWoods llp, counsel for the Owner Trustee, in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect
that:
(i) BONY is duly incorporated and validly existing as a
banking corporation under the laws of the State of New York and has
the power and authority to execute, deliver and perform its
obligations under the Trust Agreement and to consummate the
transactions contemplated thereby.
(ii) The Trust Agreement has been duly authorized, executed
and delivered by BONY and is the legal, valid and binding agreement of
BONY, enforceable against BONY in accordance with its terms, except as
the enforcement thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other similar laws relating to or affecting
the enforcement of creditor's rights generally and to general
equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law).
(iii) The Owner Trustee has duly executed and delivered each
Basic Document to which the Trust is a party on behalf of the Trust in
accordance with the authorization contained in the Trust Agreement.
(iv) Neither the execution, delivery and performance by BONY
of the Trust Agreement, the execution and delivery by the Owner
Trustee on behalf of the Trust of the Basic Documents to which the
Trust is a party, nor the consummation of the transactions
contemplated by the foregoing, nor compliance with the terms thereof,
will conflict with or result in a breach of, or constitute a default
under the charter or bylaws of BONY or any law, rule or regulation of
the State of New York governing the banking or trust powers of BONY
or, to our knowledge, without independent investigation, any judgment
or order of the State of New York applicable to BONY or its properties
or, to our knowledge, without independent investigation, any
indenture, mortgage, contract or other agreement or instrument to
which BONY is a party or by which it is bound.
(v) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission of the State of New York is required by or with
respect to BONY for the (A) valid execution, delivery and performance
of the Trust Agreement, (B) valid execution and delivery by the Owner
Trustee on behalf of the Trust of the Basic Documents to which the
Trust is a party, or (C) validity or enforceability the agreements
listed in clauses (A) or (B) of this paragraph, other than the filing
of the Certificate of Trust with the Delaware Secretary of State.
(vi) To our knowledge, without independent investigation,
there are no pending or threatened actions, suits or proceedings
affecting BONY before any court or other government authority of the
State of New York which, if adversely determined, would materially and
adversely affect the ability of BONY to carry out the transactions
contemplated by the Trust Agreement.
25
(l) Opinion of Counsel for the Delaware Trustee. At the Closing Time,
the Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., counsel for the Delaware
Trustee, in form and substance satisfactory to counsel for the
Underwriters, substantially to the effect that:
(i) BONY (Delaware) is duly incorporated and validly existing
as a banking corporation under the laws of the State of Delaware and
has the power and authority to execute, deliver and perform its
obligations under the Trust Agreement and to consummate the
transactions contemplated thereby.
(ii) The Trust Agreement has been duly authorized, executed
and delivered by BONY (Delaware) and is the legal, valid and binding
agreement of BONY (Delaware), enforceable against BONY (Delaware) in
accordance with its terms, except as the enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer and other
similar laws relating to or affecting the enforcement of creditor's
rights generally and to general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at
law).
(iii) The Delaware Trustee has duly executed and delivered the
Trust Agreement on behalf of the Trust in accordance with the
authorization contained in the Trust Agreement.
(iv) Neither the execution, delivery and performance by BONY
(Delaware) of the Trust Agreement, nor the consummation of the
transactions contemplated thereby, nor compliance with the terms
thereof, will conflict with or result in a breach of, or constitute a
default under the charter or bylaws of BONY (Delaware) or any law,
rule or regulation of the State of Delaware governing the banking or
trust powers of BONY (Delaware) or, to our knowledge, without
independent investigation, any judgment or order of the State of
Delaware applicable to BONY (Delaware) or its properties or, to our
knowledge, without independent investigation, any indenture, mortgage,
contract or other agreement or instrument to which BONY (Delaware) is
a party or by which it is bound.
(v) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission of the State of Delaware is required by or with
respect to BONY (Delaware) for the valid execution, delivery and
performance of the Trust Agreement, or for the validity or
enforceability thereof, other than the filing of the Certificate of
Trust with the Delaware Secretary of State.
(vi) To our knowledge, without independent investigation,
there are no pending or threatened actions, suits or proceedings
affecting BONY (Delaware) before any court or other government
authority of the State of Delaware which, if adversely determined,
would materially and adversely affect the ability of BONY (Delaware)
to carry out the transactions contemplated by the Trust Agreement.
26
(vii) The Notes have been duly authorized, executed and issued
by the Trust.
(m) Opinion of Counsel for the Underwriters. At the Closing Time, the
Underwriters shall have received the favorable opinion, dated as of the
Closing Time, of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ llp, counsel for the
Underwriters, in form and substance satisfactory to the Underwriters. In
rendering such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York
and the federal law of the United States, upon the opinions of counsel
reasonably satisfactory to the Underwriters.
(n) Reliance Letters. At the Closing Time, counsel to CarMax and the
Depositor shall provide reliance letters to the Underwriters relating to
each legal opinion relating to the transaction contemplated hereby rendered
to either Trustee or either Rating Agency.
(o) Maintenance of Rating. At the Closing Time, the Class A-1 Notes
shall be rated by each Rating Agency in its highest short-term rating
category and the Class A-2, Class A-3 and Class A-4 Notes shall be rated in
the highest rating category by each Rating Agency, the Class B Notes shall
be rated "Aa1" and "AA" by ▇▇▇▇▇'▇ and Standard & Poor's, respectively, the
Class C Notes shall be rated "A1" and "A" by ▇▇▇▇▇'▇ and Standard & Poor's,
respectively, and the Class D Notes shall be rated "Baa3" and "BBB" by
▇▇▇▇▇'▇ and Standard & Poor's, respectively, and the Depositor shall have
delivered to the Underwriters a letter dated the Closing Time from each
Rating Agency, or other evidence satisfactory to the Representative,
confirming that the Notes have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating
assigned to the Notes or any other securities of CarMax or any of its
Affiliates by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act, and no such rating agency shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of the Notes or any other securities of CarMax or
any of its Affiliates.
(p) Additional Rating Agency Requirements. The Depositor will, to the
extent, if any, that the ratings provided with respect to the Notes by
either Rating Agency are conditioned upon the furnishing or the taking of
any other actions by the Depositor, furnish such documents and take all
such other actions.
(q) Additional Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as
it may reasonably require for the purpose of enabling it to pass upon the
issuance of the Securities and the sale of the Notes as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Depositor in connection
with the foregoing shall be satisfactory in form and substance to counsel
for the Underwriters.
27
(r) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Underwriters by notice to the
Depositor at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive
any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Underwriters. CarMax and the Depositor agree
jointly and severally to indemnify and hold harmless the Underwriters and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in each Collateral
Term Sheet (if any), each Structural Term Sheet (if any), all Computational
Materials (if any), any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d)) any such settlement is effected with the written consent of CarMax or
the Depositor; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriters),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever, based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under clause (i)
or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
CarMax and the Depositor by the Underwriters through the Representative
expressly for use in the Registration Statement (or any amendment
28
thereto), each Collateral Term Sheet (if any), each Structural Term Sheet
(if any), all Computational Materials (if any), any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed that the only such information furnished by the
Representative consists of the following information under the caption
"Underwriting" in the Prospectus Supplement, the (i) concession and
reallowance figures appearing in the second table and (ii) information in
the ninth paragraph insofar as it relates to market-making transactions.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have
the respective meanings assigned to them in the February 13, 1995 letter of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ on behalf of the Public Securities
Association (which letter, and the Commission's response thereto, were publicly
available February 17, 1995). The term "Collateral Term Sheet" as used herein
includes any subsequent Collateral Term Sheet that reflects a substantive change
in the information presented. The term "Computational Materials" has the meaning
assigned to it in the May 17, 1994 letter of ▇▇▇▇▇ & Wood on behalf of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & Co., Inc. (which letter, and the Commission's response thereto, were
publicly available May 20, 1994).
(b) Indemnification of CarMax and the Depositor. The Underwriters agree
severally but not jointly to indemnify and hold harmless CarMax and the
Depositor and each person, if any, who controls CarMax and the Depositor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in Section 6(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, of
material facts made in the Prospectus (or any amendment thereto), each
Collateral Term Sheet (if any), each Structural Term Sheet (if any), all
Computational Materials (if any), any Preliminary Prospectus or the Registration
Statement (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to CarMax and the Depositor by the
Underwriters through the Representative expressly for use in the Registration
Statement (or any amendment thereto), each Collateral Term Sheet (if any), each
Structural Term Sheet (if any), all Computational Materials (if any), any
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto), it being understood and agreed that the only such information
furnished by the Representative consists of the following information under the
caption "Underwriting" in the Prospectus Supplement, the (i) concession and
reallowance figures appearing in the second table and (ii) information in the
ninth paragraph insofar as it relates to market-making transactions.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a), counsel
to the indemnified parties shall be selected by the Underwriters, and, in the
case of parties indemnified pursuant to Section 6(b), counsel to the indemnified
parties shall be selected by CarMax or the Depositor. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of
29
the indemnified party) also be counsel to the indemnified party. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section or Section 7 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 7. Contribution. If the indemnification provided for in Section 6
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by CarMax and the
Depositor on the one hand and the Underwriters on the other hand from the
offering of the Notes pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of CarMax and the Depositor on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by CarMax and the Depositor on the one hand
and the Underwriters on the other hand in connection with the offering of the
Notes pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes pursuant to
this Agreement (before deducting expenses) received by CarMax and the Depositor
and the total underwriting discounts and commissions received by the
Underwriters, bear to the aggregate initial offering prices of the Notes. The
relative fault of CarMax and the Depositor on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
30
information supplied by CarMax or the Depositor or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
CarMax, the Depositor and the Underwriters each agree that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever, based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
underwriting discounts and commissions received by such Underwriter in respect
of the Notes underwritten by it and distributed to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person, if any, who controls CarMax or the Depositor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as CarMax and the
Depositor. The Underwriters' respective obligations to contribute pursuant to
this Section are several in proportion to the principal amount of Notes set
forth opposite their respective names in Schedule A and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement
(including, without limitation, Sections 6 and 7 hereof) or in certificates of
officers of CarMax, the Depositor and their respective Affiliates submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters or any controlling
person, or by or on behalf of CarMax, the Depositor and their respective
Affiliates, and shall survive delivery of the Notes to the Underwriters.
Section 9. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this Agreement,
by notice to the Depositor, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is
31
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of
CarMax or the Depositor, whether or not arising in the ordinary course of
business, (ii) if there has occurred any material adverse change in the
financial markets in the United States, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representative, impracticable or inadvisable to market
the Notes or to enforce contracts for the sale of the Notes, (iii) if trading in
any securities of CarMax, the Depositor or any of their respective Affiliates
has been suspended or materially limited by the Commission or if trading
generally on the American Stock Exchange, the New York Stock Exchange or in the
Nasdaq National Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, (iv) a material disruption has occurred in commercial
banking or securities settlement or clearing services in the United States or
(v) if a banking moratorium has been declared by either federal, Virginia, North
Carolina or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4, and provided further that Sections 1, 6, 7 and
8 shall survive such termination and remain in full force and effect.
Section 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Notes which it
or they are obligated to purchase (the "Defaulted Notes"), then the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Notes in
such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Representative shall not have completed such arrangements within
such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of Notes to be purchased on
such date, the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations in Schedule A bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of Notes to be purchased on such date,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement either the Representative or the Depositor shall have the right
to postpone the Closing Time for a
32
period not exceeding seven days in order to effect any required changes in the
Registration Statement or the Prospectus or in any other documents or
arrangements.
Section 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at Banc of America
Securities LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; notices to CarMax shall be directed to it at ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of General Counsel; notices to
the Depositor shall be directed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of Treasurer.
Section 12. Parties. This Agreement shall inure to the benefit of and be
binding upon each of the Underwriters, CarMax, the Depositor and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, CarMax, the Depositor and their respective successors and
the controlling persons, directors and officers referred to in Sections 6 and 7
and their heirs and legal representatives any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, CarMax, the
Depositor and their respective successors, and the controlling persons,
directors and officers referred to in Sections 6 and 7 and their heirs and legal
representatives and for the benefit of no other person, firm or corporation. No
purchaser of Notes from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
Section 13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of law provisions (other than Section 5-1401 of the General
Obligations Law), and the obligations, rights and remedies of the parties under
this Agreement shall be determined in accordance with such laws.
Section 14. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction hereof.
33
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Representative a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among CarMax, the Depositor and the Underwriters in accordance with its terms.
CARMAX AUTO FUNDING LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
CARMAX AUTO SUPERSTORES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above
written:
BANC OF AMERICA SECURITIES LLC,
as Representative of the
Underwriters named in
Schedule A hereto
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
Underwriting Agreement
SCHEDULE A
Amount of Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4 Class B
Underwriter Notes Notes Notes Notes Notes
----------- ------------- ------------- ------------- ------------- -------------
Banc of America Securities LLC .... $ 64,500,000 $ 73,500,000 $ 64,500,000 $ 64,500,000 $ 9,000,000
Wachovia Capital Markets, LLC...... 64,500,000 73,500,000 64,500,000 64,500,000 9,000,000
Total.............................. $ 129,000,000 $ 147,000,000 $ 129,000,000 $ 129,000,000 $ 18,000,000
============= ============= ============= ============= =============
Amount of Class Amount of Class
Underwriter C Notes D Notes
----------- --------------- ---------------
Banc of America Securities LLC..... $ 12,000,000 $ 12,000,000
Wachovia Capital Markets, LLC...... 12,000,000 12,000,000
Total.............................. $ 24,000,000 $ 24,000,000
=============== ===============
S-A-1